Full Money Market

Posts Tagged ‘howto’

The Blog Entry that Accompanies this Vlog is at: http://investorandtrader.blogspot.com/2008/11/money-management-performance-analysis.html

My Daily Blog is at: http://investorandtrader.blogspot.com/

My channel at BlogTV is: http://www.blogtv.com/People/Airelon

Ok. We’ve got the previous money management principles down. Now we just want to jump into using them to trade the Forex, the Stock Market, to Day Trade with, or to use in the Commodity Futures arena. Not so fast.

How do we take everything we’ve discussed thusfar in regards to Money Management Principles, and putting them in an easy to read format? We discuss that in this video . . .

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and risk tolerance. Included Music is by Paul Young. A personal friend and is not a part of any music license, recording label, etc

Duration : 0:9:30

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Technorati Tags: accuracyrate, Airelon, analyze, commodityfutures, daytrading, drawdown, Forex, howto, invest, investing, moneymanagement, numbers, positiontrading, riskrewardratio, stockmarket, strategy, swingtrading, trading, tradingforaliving, tradingplan

http://www.informedtrades.com/

A lesson on how most traders have unrealistic profit expectations which cause them to lose all their money and what realistic profit expectations are when trading the stock, futures or forex markets.

The first step in understanding and building a solid money management plan, the key component in successful trading, is setting realistic profit expectations. All too often I see people open trading accounts with balances of $10,000 or under expecting to make enough money to support themselves from their trading profits within a short period of time. After seeing all of the hype that is out there surrounding most trading education, trading signal services, etc it is no wonder that people think this is a reasonable goal, but that does not make it a realistic one.

As most any truly successful trader will tell you, the stock market has averaged somewhere in the neighborhood of 10% a year over the last 100 years. What this basically means is that if you would have invested in the 30 stocks that make up the Dow Jones Industrial Average, the index which is designed to represent the overall market, you would have earned about 10% on your money on average over the last 100 years. With this in mind, what most any truly successful trader will also tell you, is that if you can consistently double that return, on average, over the long term, then you will be considered among the best traders out there.

Duration : 0:5:58

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Technorati Tags: Business, daytrade, finance, Forex, futures, howto, informedtrades, investing, market, money, of, psychology, stock, Trade, trading

The Blog Entry that Accompanies this Video is at: http://investorandtrader.blogspot.com/2008/11/money-management-risk-analysis.html

My Daily Blog is at: http://investorandtrader.blogspot.com/

My channel at BlogTV is: http://www.blogtv.com/People/Airelon

Whether you are a forex, stock market, day trader or commodity futures trader, Money management is key. Most know that from my daily blog at http://investorandtrader.blogspot.com/ , I often talk about Money Management. Now on the video blog, I will give a brief introduction to it, and in the next few entries, discuss Money Management principles, and the importance of such strategies . . .

I am re-doing this video, as YouTube has asked that I remove the videos that have copywrited music before and after the video …

This is all about Risk Analysis, and a couple of key, key principles that you need to consider with Risk Analysis.

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and risk tolerance. Included Music is by Paul Young. A personal friend and is not a part of any music license, recording label, etc

Duration : 0:9:42

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Technorati Tags: Airelon, commodity, daytrading, dividends, DRIP, Forex, futures, howto, investing, moneymanagement, options, positiontrading, riskanalysis, stockmarket, stoplossorder, swingtrading, trading, tradingforaliving

My Daily Blog is at: http://investorandtrader.blogspot.com/

So, I had that series regarding Futures, and Commodity Futures.

What about options on Futures? I’m going to begin discussing that. Today we discuss exactly what * is * a Futures option? Why does it have value?

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Duration : 0:6:11

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Technorati Tags: Airelon, ChallengeProject, commodity, Forex, futures, howto, Inflation, MACD, options, RSI, stochastics, stockmarket, stocks, Trade

http://www.informedtrades.com/

A less on how traders determine their initial stop levels when trading the stock, futures, and forex markets.

In our last lesson we looked at the difficulty of overcoming a loss in the market to further emphasize the importance of protecting your trading capital as a critical component of any successful trading strategy. In today’s lesson we are going to start to look at the first and one of the best ways of protecting one’s trading capital, setting your initial stop.

As we learned about in our lesson on the effects of trading losses, 50% or more of the trades made by many successful trading strategies are losers. These trading strategies and traders are successful not because they are highly accurate on a trade by trade basis, but because when they are wrong they cut their losses quickly and when they are right they let their profits run. While the trading strategy that you eventually end up trading for yourself may have a higher success rate than what I mention above, any strategy is going to have loosing trades, so the first key to staying in the game is to have a plan for managing those losses so they do not get out of control and wipe out your chances for success.

With this in mind, what most traders will start with when designing a plan for setting their initial stop loss is the amount they can afford to loose on a per trade basis without having a detrimental affect on their account. While this varies from trader to trader and from strategy to strategy, as Dr. Alexander Elder mentions in his book Trading for a Living, many studies have shown that strategies and traders who risk more than 2% of their overall trading capital on any one trade are rarely successful over the long term. From what I have seen most traders risk way more than this on an individual trade basis, another large contributor to the high failure rate among traders.

Traders who set their per trade risk level at 2% of their trading capital or less, not only put themselves in a situation where a fairly lengthy string of losses will not knock them out of the game, but also put themselves in a situation where any one trade is not going to make or break their account. This is important not only from a money management standpoint but also from a psychological standpoint in that they are not attached to any one trade and are therefore more likely to stick to their strategy.

In order to have a true understanding of what this number should be for a specific strategy you will need to know what the expected accuracy rate is for the strategy, something which will cover in later lessons. For now however it is sufficient to simply understand that you need to have a feel for how much you plan to risk on a per trade basis as a first step in designing a successful money management strategy, and that you should be very wary of any strategy which risks more than 2% of your trading capital on any one trade.

Now that we understand that determining how much to risk per trade is the first step in any successful money management strategy, we can move on to other methods of setting your initial stop which fit within the limit set by the amount a trader is willing to risk on a per trade basis.

As always if you have any questions or comments please leave them in the comments section below so we can all learn to trade together, and good luck with your trading!

Duration : 0:3:16

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Technorati Tags: Business, daytrade, finance, Forex, futures, howto, informedtrades, investing, market, money, of, psychology, stock, Trade, trading

http://www.informedtrades.com/5712-video-review-dr-alexander-elders-book-trading-living.html

A lesson on crowd psychology and how it relates to trading the stock, futures, and forex markets.

The best summary that I have seen on this subject, as well as a great book on trading in general is Dr. Alexander Elder’s book Trading for a living. As the Trader and Psychologist points out in his book, people think differently when acting as part of a crowd than they do when acting alone. Dr Elder points out that “People change when they join crowds. They become more credulous, impulsive, anxiously search for a leader, and react to emotions instead of using their intellect.”

In his book Dr. Elder gives several examples of academic studies which have been done which show that people have trouble doing simple tasks such as choosing which line is longer than the other when put in a situation with other people who were instructed to give the wrong answer.

Perhaps no where is the strange effect is the psychology of crowds seen than in the financial markets. One of the more recent examples as I have spoken about in my other lessons of the effect that the psychology of crowds can have on the markets is the run-up of the NASDAQ into 2000. As you will find by pulling out the history books however, this is not an isolated incident as financial history is littered with similar price bubbles created and then destroyed in the same way as the NASDAQ bubble was.

So why does history continue to repeat itself? As Dr. Elder points out in his book, from a primitive standpoint chances of survival are often much higher as part of a group than they are alone. Similarly war’s are often one by militaries with the strongest leaders. It is thus only natural to think that human’s desire to survive would breed a desire to be part of a group with a strong leader into the human psyche.

So how does this relate to trading? Well as we learned in our lessons on Dow Theory, the price is representative of the crowd and the trend is representative of the leader of that crowd. With this in mind think about how difficult it would have been to short the NASDAQ at the high’s in 2000, just at the height of the frenzy when everyone else was buying. In hindsight you would have ended up with a very profitable trade but, had the trade not worked out, people would have asked how could you have been so dumb to sell when everyone else knew the market was going up?

Now think about all the people who held on to their positions and lost tons of money after the bubble burst in 2000. As they had lots of company there were probably not a whole lot of people who were laughing at them. Yes they were wrong but how could they have known when so many others were wrong too?

By looking at this same example, you can also see how panic selling often ensues after sharp trends in the market as this is representative to a crowd whose leader has abandoned them.

In order to trade successfully people need a trading plan which is designed before entering a trade and becoming part of the crowd so they can fall back on their plan when the emotions which are associated with being part of a crowd inevitably arise. Successful traders must also realize that there is a time to run with the crowd and a time to leave the crowd, a decision which must be made by a well thought out trading plan designed before entering a trade.

That completes our lesson for today and our lessons on the psychology of money management. In tomorrow’s lesson we are going to begin looking at different strategies which can be used to manage a trade once you have entered, which many traders also use to help remove some of the negative emotional effects of trading as part of a crowd.

As always if you have any questions or comments please leave them in the comments section below so we can all learn to trade together, and good luck with your trading!

Duration : 0:7:0

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Technorati Tags: Business, daytrade, finance, Forex, futures, howto, informedtrades, investing, market, money, of, psychology, stock, Trade, trading

The Blog Entry that Accompanies this Entry is at: http://investorandtrader.blogspot.com/2008/06/futures-options-series-option.html

My Daily Blog is at: http://investorandtrader.blogspot.com/

So, I had that series regarding Futures, and Commodity Futures. What about options on Futures? I’ve been discussing that.

Ok. We’ve gone through the Futures, and had a whole series on Commodity Futures. We discussed why options are valuable. We discussed what is meant by the term “Put” option, and “Call” option. We discussed the five components of pricing with the Black – Scholes model.

I will finish up by talking about Futures Options Strategies …

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Duration : 0:6:34

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Technorati Tags: BlackScholes, commodities, Covestor, Forex, futures, howto, MACD, options, RSI, stochastics, stockmarket, stocks, strategies, Trade

http://www.informedtrades.com/

A lesson on the importance of money management in trading and how most traders of the stock, futures, and forex markets ignore money management because they do not consider it important and therefore loose money trading.

Why the Majority of Traders Fail

In our last lesson we finished up our series on Candlestick Chart Patterns with a look at the Inverted Hammer and the Shooting Star Candlestick Chart Patterns. In today’s lesson we are going to start a new series on money management, the most important concept in trading and the reason why most traders fail.

Over the last several years working in financial services I have watched hundreds if not thousands of traders trade, and over and over again I see smart people who have been intelligent enough to accumulate large sums of money in their non trading careers open a trading account and loose huge sums of money making what you would think are easily avoidable mistakes that one would think even the dumbest traders would avoid.

Those same traders are the ones that consider themselves too good or smart to make the same mistakes that so many others make, and that will skip over this section to get to what they feel is the “real meat” of trading, strategies for picking entry points. What these traders and so many others fail to realize is that what separates the winners from the losers in trading is not how good someone is at picking their entry points, but how well they factor in what they are going to do after they are in a trade into their trade entries and how well they stick to their trade management plan once they are in the trade.

For the few who do get that money management is far and away the most important aspect of trading, the large majority of these people don’t understand the large role that psychology plays in money management or consider themselves above having to work on channeling their emotions correctly when trading.

So in this series of lessons we are going to first start with a look at the psychology of money management and the role that this plays in causing so many traders to loose their shirts and then move on to ways of managing this before finishing up with specific strategies for managing trades once you are in them.

While not the most exciting part of trading, I assure you that if you don’t understand and work on the concepts presented in this section you are pretty much doomed to failure as a trader no matter how well you understand the other aspects of trading. Having said this I also assure you that if you do understand and work to expand your knowledge of the concepts presented in this series you will be well on your way to becoming a successful trader.

Duration : 0:3:0

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Technorati Tags: daytrade, finance, Forex, futures, howto, informedtrades, investing, loosingmoney, market, money, moneymanagement, stock, Trade

My Daily Blog is at: http://investorandtrader.blogspot.com/

So, I had that series regarding Futures, and Commodity Futures. What about options on Futures? I’ve been discussing that.

Ok. We’ve gone through the Futures, and had a whole series on Commodity Futures. We discussed why options are valuable. We discussed what is meant by the term “Put” option, and “Call” option. We discussed the five components of pricing with the Black – Scholes model. We discussed the first two components of an options value, in the delta and the gamma. Now, let’s turn to the aspect of time, or ‘theta’.

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Duration : 0:6:23

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Technorati Tags: Airelon, BlackScholes, commodities, Forex, futures, howto, MACD, options, RSI, stochastics, stockmarket, stocks, theta, time, Trade

The Blog Entry that Accompanies this Vlog is at: http://investorandtrader.blogspot.com/2008/11/money-management-find-edge.html

My Daily Blog is at: http://investorandtrader.blogspot.com/

My channel at BlogTV is: http://www.blogtv.com/People/Airelon

How do you improve the relationship between your Risk Reward Ratio, your Accuracy Rate?

You use an actual “Edge”. But exactly what is an “Edge” to trading. It’s not technical analysis. But it assists your technical analysis.

We discuss that in this vlog entry …

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and risk tolerance. Included Music is by Paul Young. A personal friend and is not a part of any music license, recording label, etc

Duration : 0:8:0

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Technorati Tags: accuracy, Airelon, bias, commodityfutures, daytrading, discipline, drawdown, edge, Forex, howto, investing, methodology, moneymanagement, options, positiontrading, riskrewardratio, stockmarket, swingtrading, trading